image

The Market Cliff

NOT YOUR FATHER'S DOWN CYCLE

Remember the “Fiscal Cliff”? At the end of 2012, the media was all abuzz about an artificial deadline previously set by Congress after which a slew of budget cuts and tax hikes would go into effect unless lawmakers could reach a budget agreement. Congress had the power to create the artificial Fiscal Cliff deadline, and Congress had the power—although not necessarily the immediate internal agreement—to avoid this artificial cliff, which eventually they did.

The kind of cliff that we want to introduce you to now is not a cliff that can be avoided by an act of Congress, the Federal Reserve, or by any part of the U.S. government. In fact, this new kind of cliff cannot be avoided at all because it will be the natural and unavoidable result of years of enormous government borrowing and money printing. This new cliff is what we will inevitably end up with when massive government stimulus to support a multibubble economy ceases to be effective or even possible, and instead fundamental economic gravity kicks in and the bubbles pop. This is what we call the Market Cliff, and the United States is headed straight for it.

The Market Cliff Won't Be Just a “Down Cycle”

The mantra we often hear in a down market—but rarely during a boom—is that markets are cyclical. Every valley, say the cheerleaders, is just a precursor to the next peak, and every ...

Get The Aftershock Investor: A Crash Course in Staying Afloat in a Sinking Economy, 2nd Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.